Lyft and Uber say they’ll leave Minneapolis after city requires drivers to be paid more

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Lyft and Uber say they’ll leave Minneapolis.Photo byauthor (licensed under CC BY 2.0)

Lyft and Uber have announced their decision to discontinue services in Minneapolis following the city council's vote to override a mayoral veto.

The vote mandates that ride-hailing services must raise driver wages to match the local minimum wage of $15.57 per hour.

In response to this decision, Lyft referred to the ordinance as "deeply flawed," expressing support for a minimum earning standard for drivers but disagreeing with the specific requirement set by the council.

“It should be done in an honest way that keeps the service affordable for riders,” Lyft said. “This ordinance makes our operations unsustainable, and as a result, we are shutting down operations in Minneapolis when the law takes effect on May 1.”

Uber did not immediately respond to a request for comment. However, news outlets reported that it issued a similar statement announcing the suspension of its service on the same day.

Both companies have committed to advocating for state-level legislation that would counter the Minneapolis ordinance. Meanwhile, state House Republicans introduced a bill on Thursday to preempt local regulations concerning ride-hailing services.

Despite Mayor Jacob Frey's intention to veto it, the City Council passed the measure with a 9-4 vote last week.

The measure mandates ride-hailing companies to compensate drivers a minimum of $1.40 per mile and $0.51 per minute for passenger transportation time, or $5 per ride, whichever is higher, excluding tips.

These requirements only apply to the portion of multi-city trips that occur within Minneapolis.

Critics warn that the bill could lead to increased costs for all users of ride-hailing services, particularly impacting individuals with limited incomes and those with disabilities who heavily rely on these services.

On the other hand, proponents argue that these services have historically taken advantage of cheap labor from marginalized communities, such as people of color and immigrants.

Governor Tim Walz, a Democrat, vetoed a bill last year that aimed to raise wages for drivers working for companies like Uber and Lyft.

He expressed concern over the potential impact on a wide range of users, including those with disabilities.

Walz emphasized the significance of these services to many individuals and feared that if changes were implemented abruptly, there might not be adequate alternatives available.

Looking ahead, Walz hopes for a balanced solution from the Legislature that ensures fair compensation for drivers while also preventing companies from exiting the market.

Notably, Seattle and New York City have enacted similar measures to boost driver wages without driving Uber and Lyft out of their respective cities.